Good morning. My name is Steve, and I will be your conference operator today. At this time, I would like to welcome everyone to the Molson Coors Brewing Company 2012 First Quarter Earnings Call. [Operator Instructions] Before we begin, I will paraphrase the company's Safe Harbor language. Some of the discussion today may include forward-looking statements. Actual results could differ materially from what the company projects today, so please refer to its most recent 10-K and 10-Q filings for a more complete description of factors that could affect these projections. The company does not undertake to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Regarding any non-U.S. GAAP measures that may be discussed during the call and from time to time by the company's executives in discussing the company's performance, please visit the company's website at www.molsoncoors.com and click on the Financial Reporting tab on the Investor Relations page for a reconciliation of these measures to the nearest U.S. GAAP results. Also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in U.S. dollars. Now I would like to turn the call over to Peter Swinburn, President and CEO of Molson Coors.

Thank you, Steve. Hello, and welcome, everybody, to the Molson Coors earnings call. Thank you for joining us today. With me on the call this morning are Stewart Glendinning, Molson Coors' CFO; Dave Perkins, COO of Molson Coors Canada; Tom Long, CEO of MillerCoors; Mark Hunter, CEO of Molson Coors U.K.; Kandy Anand, President, Molson Coors International; Sam Walker, Molson Coors Chief Legal and People Officer; Zahir Ibrahim, Molson Coors' Controller; and Dave Dunnewald, Molson Coors' VP of Investor Relations. On the earnings call today, Stewart and I will take you through highlights of our quarter 1 results for Molson Coors Brewing Company, along with additional perspective regarding our pending acquisition of the StarBev brewing business and our outlook for the balance of the year. In the first quarter, underlying earnings per share grew 9.3% on positive beer pricing and sales mix, continued cost savings initiatives and stock repurchases in the second half of last year. Underlying gross margin, including MillerCoors, increased 10 basis points from a year ago in the quarter, while underlying operating margin was unchanged at 9%. The U.S. posted a strong quarter, with underlying earnings growing nearly 17%, while the U.K. and Canada, underlying pretax income declined from a year ago. The U.S. benefited from its strongest NSR per hectoliter quarter in 3 years and drove significant cost savings to the bottom line. In Canada and the U.K., we faced margin pressure from higher pension and input inflation, as well as increased marketing investments in the U.K. and cycling onetime costs in Canada. Towards the end of the quarter, we launched a number of new line extensions. Within our core brand portfolio, Coors Light sales to retail grew more than 4% in the quarter driven by volume growth and market share gains in Canada, the U.S.…

Thanks, Peter. Hello, everyone. First quarter financial highlights. On the bottom line, underlying after-tax income of $85.3 million or $0.47 per diluted share was 4.5% higher than a year ago, driven by positive beer pricing and sales mix across our company. Underlying EPS increased 9.3%. Regionally, pretax equity income from MillerCoors drove our bottom line performance in the first quarter, with a 16.8% increase on the strength of solid pricing and sales mix, along with continuing cost reductions. With respect to the U.S., we also note that there's some timing impact of spending in marketing, which we expect to reverse in the balance of the year and especially in the second quarter. Canada results were negatively influenced by approximately $4 million of onetime benefits realized in the first quarter of 2011. In the U.K., increased marketing investment, weaker off-premise pricing, primarily driven by customer mix, combined with lower volumes and input inflation negatively impacted our results. In addition, both U.K. and Canada results were affected by increased defined benefit pension expense of $6.6 million in total. Worldwide beer volume for Molson Coors decreased 0.4% due to lower volume in the U.K. and Canada, partially offset by 24% STR growth in international. For the first time, this quarter, I will provide some consolidated non-GAAP results that include our portion of MillerCoors. On this basis, total company net sales increased 1.9% in the first quarter driven by the U.S., Canada and international. Net sales per hectoliter increased 2.7% in the quarter, primarily due to solid pricing across our company and the addition of NAB contract brewing revenue in Canada. Cost of goods sold per hectoliter increased 2.5% due to input cost inflation, higher pension expense and the addition of contract brewing volume in Canada. Input inflation accounted for more than 3/4 of…

Thanks, Stewart. So in April, we rolled out Coors Light Iced T across Canada, and in June, our above-premium portfolio will be strengthened through the addition of the new Castle & Strongbow brands. In the U.S., we have strong marketing and sales programming behind our key brands this year, leading into the peak season, especially for Miller Lite, Coors Light and Miller 64. We are also introducing or testing a range of new brands, and we are rolling out a full slate of innovative packaging, including the Miller Lite punch top can to help build our existing brands. In the U.K., Carling Chrome and Carling Zest will receive increased marketing support, as will Coors Light to extend its current strong double-digit volume growth. The 2012 investment in our International business will be similar to last year, with phasing buyers to the first half of the year. Our overriding international goal remains to build this group of businesses quickly and to reduce some investment per hectoliter so that our international group becomes a significant contributor to total company profitability by 2015. Finally, the following are the most recent volume trends for each of our businesses early in the second quarter. In Canada, our sales to retail for the first 4 weeks of the quarter declined at a mid-single digit rate versus 2011. In the U.S. for the 4 weeks ended April 28, STRs declined to a low-single digit rate on a trading day adjusted basis. In the first 4 weeks of the quarter, our U.K. STRs decreased at a high single-digit rate. And in the first 4 weeks, our international STRs have increased at a low double-digit rate. As always, please keep in mind that these numbers represent only a portion of the current quarter and trends could change in the…

[Operator Instructions] And your first question comes from the line of Judy Hong with Goldman Sachs.

First, just in terms of Canada, so in Q1, you're down 0.5%. But competitively, it looks like you lost market share. So first, maybe you can talk about the competitive performance and how would you sort of assess your market share performance in Q1. And then just in terms of the April trend being down mid-single digit, how much of Q1 strength was sort of weather-driven? And why do you think April weakened, understanding that month-to-month there could be some volatility there?

This goes to you, Dave.

Judy, yes, let me cover the different aspects, and let me start first with industry performance in Q1. On our fiscal basis, it was up about 1.3%. If you look at it on a calendar basis, it was up over 3%. Weather was certainly a positive factor during the quarter. Timing of Easter accelerated some volume from Q2 into Q1. And so it's our third consecutive quarter of industry growth now, so we're actually feeling good about that. We actually look like we outpaced the total beverage alcohol category in Q1 as well, so some positive things on the industry. But I do want to acknowledge the role of Easter and weather in that. On our market share performance and specifically, Judy, Coors Light, Molson Canadian both grew in the quarter, as did our above-premium portfolio. Our nonstrategic brands declined consistent with what I talked about last quarter, but that was largely offset by strategic brand growth everywhere but the West. And it's in the West that our share decline was concentrated. In the West, we achieved really strong NSR per hectoliter growth as we moved our value brands up and we shifted our promotional activity to less costly packs. But there's no doubt that came at the expense of share and volume, so we're just rebalancing that now. And as we look to April then in the mid-single digit decline in volume, I would say that Easter would certainly be a consideration in that with the acceleration to Q1. We had very cold weather in our major Eastern markets through the month. And I would say that our price competitiveness in the West, the factors I just talked about continue on into April and will likely continue on the early part of May as well.

So Dave, just following up on that. So I guess, can you maybe quantify how much non-strategic brands were down? And kind of how should we think about that portion of your portfolio just in terms of as you see the decline in those brands shouldn't we see better maybe pricing and better profitability? And I understand Q1, there's a lot of noise in the COGS line. But it seems like maybe you're not getting sort of the benefit of decline in some of the nonstrategic brands that you -- at the profit line.

Yes, I mean, the decline of the nonstrategic brands, I think the important thing to understand about those brands is they're actually quite profitable because there's low levels of support on them. They tend to have NSR similar to our mainstream brands, but at the bottom line, the contribution is quite strong. Really, the challenge for us, and I think I mentioned this the last quarter as well, is for us to get both innovation and core brands growing at a rate that it more than offsets what's happening on our nonstrategic brands. Nonstrategic brands would be in and around 10% of our total business, and there's nothing that we want to do by way of attention there to try to prop them up. It's really about leaning hard into our strategic brands. That's what we're doing. I think other than the challenge we've had in the West, pretty happy with what I've seen east of the Manitoba border in Q1.

Okay. And then just on the StarBev acquisition, maybe just taking a step back and talk more just from an organizational capability perspective because, obviously, Molson Coors have gone through some mergers and acquisitions with Molson and others. And I'm just wondering just based on your experience just looking back, some of the lessons that you've learned in sort of identifying what the right level of marketing spend, why do you think that the marketing investments in the StarBev business is appropriate and whether we should really not expect an even bigger step-up in terms of the brand investments. And you're making some personnel changes here, so any risk through -- as you're looking at the acquisition and some of the organizational changes and how you sort of keep the core business improving because that seems to be still your key focus. At the same time, you're obviously trying to implement this large-sized acquisition.

Okay, Judy. I'll try and answer all of that, if I can. Let me take the personnel and organization changes first. We're in very fortunate position to be able to announce the changes that we've made. There's obviously very capable people. The reality is that I could have chosen at least another 3 or 6 people to have done those roles. And the one thing I think we have done over recent years is build up a huge strength of depth -- strength in depth, I'm sorry, of people. Now that goes to the overall teams as well. So as a leader of the business, I have to make sure that if anything happens to any of our business unit leaders, be it Dave, Mark or anyone else, in some sort of crisis that we've got people to come step in, but also teams below them, that are very, very capable of running the business, and that's what we have. So as far as the existing business is concerned, I'm absolutely confident that, that will be -- we won't miss a heartbeat. As far as the StarBev business is concerned, I think we mentioned when we made the acquisition that we are very impressed with the management team over there. I have been over there to speak to all of the management team. And even this morning, we were on a call, and the message there, very clearly, is business as usual. So again, with Mark moving over to lead that business, I don't think we'll miss a heartbeat. Their plans are laid out. We know what they're plans are. We went through their plans in due diligence. We've got strong belief in their plans, and everybody needs to achieve them. So really, I think that's the strength as far as we are concerned. And as you say we've been to this process quite a few times in recent years. Specifically, on the marketing spend, we did, as you would expect, a huge amount of due diligence market by market, brand by brand. And obviously, one of the things that we looked at was the relative spend of the StarBev business against the competitive bench and also, the performance of brands by market. And based on that, we made some assessments, which, we think, are very realistic about how we would need to put behind the brands. And this is really market by market. It's not a layer approach. It's very specific to brands by market. And so again, we're very confident that the numbers that we have in are the correct amount, and we don't believe there'll be any need to increase them. Did that answer your question?

Yes, that's helpful.

Your next question comes from the line of Mark Swartzberg with Stifel, Nicolaus. Mark Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: Peter or Dave, could give us an update on how Coors Light Iced T is going in Canada and where you're headed on the opportunity for that innovation in the U.S.?

I'll take the second part. Well, no, actually, what I'll -- Tom, do you want to take the second part of that -- the front, and then we'll pass it on to Dave?

Sure. We're watching the rollout of Coors Light Iced T very carefully and, of course, we borrow with no pride at all. We're eager to find successful products across the country, and Coors Light Iced T in Canada is a great innovation that we're watching carefully. So we would be prepared to launch it given the success, and as if we learn about how the drinker base works, so we're watching that closely.

Again, Mark, it's Dave. It's not a very robust update to give. I'm -- we're in full distribution now. Above the line marketing support started April 23. So it's quite recent. Certainly, all the indications that we're getting in the early days are positive. We're seeing the numbers come in where we'd hoped to. We're achieving the pricing that we'd hoped to on the brand. It is very early days. Mark Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: Okay, fair enough. And then, I wonder, Peter, if you could just talk sort of philosophically about marketing spend as we think beyond 2012, you're going to own StarBev. You've called out, for 2 quarters now, the intention to really up the level of spend in markets other than in the United States. So as you think about how you prioritize spend, I guess, my 2 questions are, it seems like the U.S. is a lagger at least in 2012 in terms of rate of increase. So it that something we should view as kind of a strategic statement? Or is it just kind of an anomaly for the year? How are you thinking about how you allocate these dollars on a multi-geography basis?

Okay. Well, I think over the full year -- or can I let the U.S. team speak to it. We are looking -- we will be looking to increase marketing spend from hereon in, so Q1 shouldn't be an indicator of the future. And I think, Tom and the team talked about this morning but I'll let them jump in later on if they want to. As far as this year and looking forward is concerned, Mark, the -- we really tried to link this year's increased expenditure to 2 things: one was an increased innovation pipeline. We see that innovation pipeline being pretty full for 3 years, and so we would see this is a rebate, if you like, looking forward. But also, some of that money will also go on our core brands. So I think we've got to a level this year where we want to get it to you looking forward. As an indicator, obviously, that will move around at the margins plus or minus X%, obviously. But that would be really the way we're thinking about it. Shawn, do you want to add anything on the U.S.?

No, I don't think so. I think that captures our position, Peter. Mark Swartzberg - Stifel, Nicolaus & Co., Inc., Research Division: And to my -- and I mean, the number as I understand it, the percentage increases are much more dramatic outside the U.S. even once you factor in the full year plans for the U.S. Is that a fair understanding? And can you just speak to that as an indication of priorities by region?

Well, I don't believe such priorities. I mean, it will be much a higher percentage because the U.S. base is considerably higher than either the U.K. or Canada. If you look at our marketing expenditure as a percentage of turnover, I think you'll find that we're trying to catch up in some of the other geographies compared to the U.S. So I think overall, we're in a pretty good position geography by geography.

Your next question comes from the line of John Faucher from JPMorgan. John A. Faucher - JP Morgan Chase & Co, Research Division: In general, Eastern Europe is viewed as somewhat of an emerging market. And I guess, the only issue becomes with beer, you've got much higher per capita consumption to start with. So can you talk about sort of how we should view the development of Eastern Europe from a beer standpoint? And as we look at your growth expectations going forward, where can per capita consumption go? Where can pricing go? Where can market share go because most of these countries, at this point, seem relatively well developed?

John, a couple of things. I think the per capita consumption does vary country by country, and we are in actually 9 different countries. So that's the first point I would make. Everything that we've seen in these countries because as you say that's somewhat emerging markets reflects the fact that the per capita consumption is -- there is a very, very strong correlation between that and GDP growth. And so you have take a view on what's going to happen to the GDP growth in these countries. And yes, it's going to be volatile. But over the -- if you average it out, looking forward over the next 5 to 10 years, we see that is a positive trend. And so really that's the background to it. John A. Faucher - JP Morgan Chase & Co, Research Division: Okay. So I guess, if you look at this, can you talk about, then maybe getting down to some of the more specific countries within the StarBev acquisition Czech, obviously, very high per capita consumption, low market share there. Where do you line up well in terms of maybe high market share and growing per capita consumption or high per capita consumption and low market share? Just trying to understand where the opportunities are.

Yes, I think it's probably in terms of detail because we're talking about 9 countries and a multiplicity of brands, Dave can pick the real detail on that later on. But if I was to give you a background, I mean, as I mentioned, we have got the #1 brand in 5 of the markets that we're talking about. And within that 5, there are a good number where we see opportunity to continue to grow our market share position or certainly hold it and improve value around that piece and also see improvements within the overall velocity of the market. So we're comfortable that there is opportunity. It does vary market by market, but Dave can take you to the detail about later on, if you like.

Your next question comes from the line of Brett Cooper with Consumer Edge Research.

You're talking about being less price competitive in the West than Canada. Can you talk about you got there? Was it discounting? Or do you take price up and it wasn't followed? And then finally, is it safe to assume that since you talked about -- not to put words in your mouth, but basically rolling back on price, should we see the price decelerate over the back end of the year or is there an offset?

Yes, okay. In the West, what we did is we moved our value brands up certainly at a rate higher than the rest of the market in any of the GPIs. So we're trying to close the gap between our value brands and our mainstream. In addition, a lot of the promotional activity in the West is happening in fairly expensive SKUs, and so we attempted to shift that to less costly SKUs. That worked in part, but it didn't work the way we wanted it to because it wasn't the general market move, and we haven't seen the market move that way. So we're finding ourselves less competitive now, and that's why we're rolling back. In terms of the impact it will have on NSR, going forward, I wouldn't characterize is as particularly material on a national basis. Certainly, in the West, it will have some impact.

Do -- can I just follow up? On the value brands, you moved up and did -- is it fair to say competition didn't follow?

Yes. We found ourselves uncompetitive after having moved up, so our value brands ended up above the market.

[Operator Instructions] And your next question comes from the line of Bryan Spillane from Bank of America.

Just a couple of questions. First, I just want to make sure I understood the pension expense increase correctly. It's going to be -- it's a 1,200 million -- or I'm sorry, $12 million incremental expense relative to last year. Is that just for the U.K. and Canada or that's including the offset from the U.S.?

No, that includes the offset from the U.S.

Okay. So it's -- the U.K. and Canada, specifically, are $25 million higher combined?

Yes, that's correct, $25 million combined.

All right. And then -- so the $6.5 million of higher pension costs that you referenced earlier in the call is just the U.K. and Canada, right? That matches -- that's basically phasing in the $25 million in the U.K. and Canada?

That's correct. That's $6.6 million just for the first quarter.

Okay, okay. And so -- okay. And then, I guess, more broadly, as you went into this year in your core markets, basically, the expectation or the plan is to basically drive more volume growth in order to drive the P&L. And I guess, you factored out the weather in the U.S. in the first quarter, which helped in the U.S. and maybe to an extent it helped in Canada as well. Is there anything just in terms of the overall environment that has changed your thinking at all in terms of your ability to do that? Is the consumer any better or worse than it was when you set your original plan? Just want to try and get a sense for how you feel about your plans and sort of what the environment's willing to give in terms of a more volume-driven plan.

Okay. So I mean, obviously, not just volume, it's balancing the volume with the NSR growth, what we've been trying to do, Bryan. But if I try and encapsulate it, I would say that we have been, all things being equal, probably pleasant, cautiously pleasantly surprised with the U.S. and Canada. The markets are probably even better than we expected. To be honest, no idea whether that will continue, but that's what we would say, and probably the U.K. is being the same as we expected, which is difficult. So that's some of it. I mean, before April, I think we would've been a bit more positive, but you've seen the numbers in April, and so it really reflects consumer trends at the moment. It's pretty volatile, to be honest with you. But overall, yes, I think Canada and U.S. is probably more positive than we expected.

And fairly characterize that you'd be effective -- the first quarter didn't really see a full effect of all of the marketing and product innovation that you've got planned. I mean, it's part of driving the NSR. So I mean, we're not really seeing the effect of what you're investing to drive that better revenue growth. Is that fair characterization?

Yes, absolutely fair to say that marking it both from a marketing investment line on our core brands but also from innovation. Really, we should see the major benefit of that in the remaining of the year -- remainder of the year.

So Bryan, I would just add to that by saying that, of course, the first quarter is a slower quarter than any of the others. And second, as Peter highlighted, a good deal of our investment has gone behind new innovation. And as always, that innovation has some ramp-up period that there's a part for you to consider.

Okay. And then just finally, Peter, that -- I guess, since the StarBev acquisition was announced, the stock is -- your stock has underperformed. And I guess, if I can encapsulate, I guess, there was a disconnect in terms of what you're seeing in terms of the value in StarBev versus what maybe the market was hoping for, whether that was a dividend or a bigger share repurchase or some other use of the capital. Can you just talk to how you viewed that difference in terms of where the value lies in StarBev relative to doing those other kind of capital return options?

Yes, I mean, what I can say, Bryan, is that really over the last 3 years plus, we've consistently examined with our board the best way to use any cash that we have at any point in time. And we've always judged the usage of that cash against total shareholder return in the medium to long term. And as we announced a year ago, it was appropriate to use that cash for share buybacks because there was no other option on the table when StarBev came up. It was an option at the price that we bought it at, which was below 11x EBITDA multiple. It really satisfied all the financial criteria we laid out and both in our estimation and the board agreed, so over the medium to long term, that was a better way to use our cash. It will be much easier to talk about StarBev in the fine detail when we actually own the business. But you understand, at the moment, we're bound by confidentiality. So I think a lot more will become clear when we'll be able to talk in more detail as to our beliefs and our rationale. So I'd ask you just to be patient on that for a little bit longer.

Your last question comes from the line of James Watson with HSBC.

I just wanted to follow up on Canada and the market share loss. I was actually surprised when you said that the nonstrategic brands were kind of had a similar profitability, similar bottom line effect. I wanted to find out what -- how you guys define your strategic versus nonstrategic brands? And are you okay with the share loss assuming that it's all in nonstrategic brands and your strategic brands are maintaining or gaining share?

Yes, okay. Let me take a crack at that, James. I mean, the way we define a strategic brand is essentially one that we're investing behind to maintain or grow for the future. And there's about a dozen brands that would fall into that camp. The nonstrategic brands are brands that were either fully harvesting or that we may be spending a little bit on to moderate the decline in some cases. But generally, they're harvest brands. And for us, what's important is really to have a stable to growing market share over time. I mean, we want a portfolio that is capable of ensuring that we're competitive within the category. And so it's important to us that our supported brands, our strategic brands do get to a point where they're fully offsetting and more than offsetting the decline of those nonstrategic brands. Now some of our strategic brands also have premium, above-premium pricing. You know that we have a strong above-premium portfolio. But even if you look at our innovation like Coors Light Iced T, that is coming in at an above-mainstream pricing, an above-premium pricing. And so that will have a beneficial impact on our NSR and on our margins.

So that's something where even if the share losses coming from lack of the nonstrategic, we should still be seeing kind of mix benefits and gains through higher-priced brands?

Yes. I mean, over the longer term, what we're attempting to do on our portfolio is ensure that the kind of segment shifts the we see happening in the market don't disadvantage us. So over time, we see the mainstream segment declining, the above-premium increasing and the value segment tends to vary. Generally, it has trended up, but there are times when you'll see it reverse itself. We need to have fair share within each of those 3 pricing segments so that as the market shifts, it doesn't mathematically cause our market share to decline. And then within the portfolio, we want to push the premium-ization. Premium-ization is the growth of the above-premium segment, but it is also the kind of innovation that we do in the mainstream segment. So I don't consider Coors Light Iced T a true above-premium brand, but it is commanding a price index that is very attractive to us. And so within the mainstream, to the extent that we can push towards higher priced products, we will.

So is it fair to say that your marketing investment kind of matches your outlook there in terms of above-premium being higher growth so you'd have a little bit over-index if in terms of marketing on that segment?

That would be fair, although I would emphasize that the investment that we make behind Coors Light and Canadian, which are our power brands that are absolutely critical to keeping our breweries running and maintaining our bottom line, get very healthy investment.

There are no further questions at this time. I'll turn it back for any closing comments.

Okay. Thanks, Steve, and thanks, everybody, for joining us today and for your interest in the business. And we look forward to speaking to you again at the end of our next quarter. Thanks very much.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.